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Earned Income Tax Credit aka (The Self Employed Tax Credit)

Since 1 January 2016, the Earned Income Tax Credit also known as the “Self Employed Tax Credit” which is worth a maximum of €550 can be claimed by self-employed individuals, entrepreneurs and company directors who own more than 15% of the company. The introduction of the earned income tax credit will be of some consolation to self-employed tax payers who until now received no tax credit on their earned income while their PAYE counterparts receive a PAYE tax credit €1650. Although the introduction of the self-employed tax credit attempts to equalise the treatment self-employed and employees, self-employed tax payers still pay a USC surcharge of 3% on income over €100,000, a surcharge which does not apply to PAYE individuals on the exact same income. The fact that a self-employed taxpayer earning over €100,000 is not trading through a limited company raises its own questions from a tax planning perspective, the rationale for a 3% surcharge on the basis that an individual is self – employed is not yet understood.

***The tax credit does not apply to Rental, Investment or “passive income”